PARKER & PARSLEY 89 A L P
10-Q, 1996-11-12
CRUDE PETROLEUM & NATURAL GAS
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549


                                    FORM 10-Q


     / x /       Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                For the quarterly period ended September 30, 1996

                                       or

     /   /      Transition Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934
                For the transition period from _______ to _______

                         Commission File No. 33-26097-01


                           PARKER & PARSLEY 89-A, L.P.
             (Exact name of Registrant as specified in its charter)

              Delaware                                     75-2297058
    (State or other jurisdiction of                     (I.R.S. Employer
    incorporation or organization)                   Identification Number)

303 West Wall, Suite 101, Midland, Texas                      79701
(Address of principal executive offices)                    (Zip code)

       Registrant's Telephone Number, including area code : (915) 683-4768

                                 Not applicable
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                Yes / x / No / /

                               Page 1 of 11 pages.
                             -There are no exhibits-


<PAGE>



                           PARKER & PARSLEY 89-A, L.P.

                                TABLE OF CONTENTS


                                                                     Page
                          Part I. Financial Information

Item 1.   Financial Statements

          Balance Sheets as of September 30, 1996 and
             December 31, 1995   .................................    3

          Statements of Operations for the three and nine
            months ended September 30, 1996 and 1995..............    4

          Statement of Partners' Capital for the nine months
            ended September 30, 1996..............................    5

          Statements of Cash Flows for the nine months ended
            September 30, 1996 and 1995...........................    6

          Notes to Financial Statements...........................    7

Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations...................    7
               


Part II   Other Information.......................................   10

              Signatures..........................................   11



                                        2

<PAGE>



                           PARKER & PARSLEY 89-A, L.P.
                        (A Delaware Limited Partnership)

                          Part I. Financial Information

Item 1.   Financial Statements
                                 BALANCE SHEETS
                                                    September 30,  December 31,
                                                        1996          1995
                                                    -----------    -----------
                                                    (Unaudited)
                 ASSETS

Current assets:
  Cash and cash equivalents, including interest
     bearing deposits of $195,121 at September 30
     and $170,108 at December 31                    $   195,254    $   170,141
  Accounts receivable - oil and gas sales               104,390         95,946
                                                     ----------     ----------
          Total current assets                          299,644        266,087
                                                     ----------     ----------

Oil and gas properties - at cost, based on the
  successful efforts accounting method                6,709,531      6,712,280
     Accumulated depletion                           (4,108,819)    (3,957,167)
                                                     ----------     ----------
          Net oil and gas properties                  2,600,712      2,755,113
                                                     ----------     ----------
                                                    $ 2,900,356    $ 3,021,200
                                                     ==========     ==========

LIABILITIES AND PARTNERS' CAPITAL

Current liabilities:
  Accounts payable - affiliate                      $    46,385    $    62,091

Partners' capital:
  Limited partners (8,317 interests)                  2,825,247      2,929,323
  Managing general partner                               28,724         29,786
                                                     ----------     ----------
                                                      2,853,971      2,959,109
                                                     ----------     ----------
                                                    $ 2,900,356    $ 3,021,200
                                                     ==========     ==========

 The financial information included as of September 30, 1996 has been prepared
         by management without audit by independent public accountants.

   The accompanying notes are an integral part of these financial statements.

                                        3

<PAGE>



                           PARKER & PARSLEY 89-A, L.P.
                        (A Delaware Limited Partnership)

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                  Three months ended       Nine months ended
                                     September 30,            September 30,
                               ----------------------   ----------    ---------
                                  1996         1995        1996          1995
                               ---------    ---------   ----------    ---------
Revenues:
   Oil and gas                 $ 257,114    $ 227,927    $ 802,427    $ 710,280
   Interest                        2,687        2,599        6,766        6,664
                                --------     --------     --------     --------

                                 259,801      230,526      809,193      716,944
                                --------     --------     --------     --------
Costs and expenses:
   Oil and gas production         96,766      106,360      323,712      341,758
   General and administrative      8,199        6,112       25,467       21,308
   Depletion                      43,458      106,873      151,652      302,741
                                --------     --------     --------     --------

                                 148,423      219,345      500,831      665,807
                                --------     --------     --------     --------

Net income                     $ 111,378    $  11,181    $ 308,362    $  51,137
                                ========     ========     ========     ========
Allocation of net income:
   Managing general partner    $   1,113    $     112    $   3,083    $     511
                                ========     ========     ========     ========

   Limited partners            $ 110,265    $  11,069    $ 305,279    $  50,626
                                ========     ========     ========     ========
Net income per limited
   partnership interest        $   13.26    $    1.33    $   36.71    $    6.09
                                ========     ========     ========     ========
Distributions per limited
   partnership interest        $   19.02    $   13.97    $   49.22    $   43.70
                                ========     ========     ========     ========

         The financial information included herein has been prepared by
           management without audit by independent public accountants.

   The accompanying notes are an integral part of these financial statements.

                                        4

<PAGE>



                           PARKER & PARSLEY 89-A, L.P.
                        (A Delaware Limited Partnership)

                         STATEMENT OF PARTNERS' CAPITAL
                                   (Unaudited)




                                     Managing
                                     general       Limited
                                     partner       partners          Total
                                    ---------     -----------     -----------

Balance at January 1, 1996          $  29,786     $ 2,929,323     $ 2,959,109

    Distributions                      (4,145)       (409,355)       (413,500)

    Net income                          3,083         305,279         308,362
                                     --------      ----------      ----------

Balance at September 30, 1996       $  28,724     $ 2,825,247     $ 2,853,971
                                     ========      ==========      ==========






         The financial information included herein has been prepared by
           management without audit by independent public accountants.

   The accompanying notes are an integral part of these financial statements.

                                        5

<PAGE>



                           PARKER & PARSLEY 89-A, L.P.
                        (A Delaware Limited Partnership)

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)


                                                           Nine months ended
                                                              September 30,
                                                        ----------------------
                                                           1996         1995
                                                        ---------    ---------
Cash flows from operating activities:

  Net income                                            $ 308,362    $  51,137
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Depletion                                           151,652      302,741
  Changes in assets and liabilities:
      (Increase) decrease in accounts receivable           (8,444)       5,378
      Increase (decrease) in accounts payable             (15,706)      36,087
                                                         --------     --------

          Net cash provided by operating activities       435,864      395,343
                                                         --------     --------

Cash flows from investing activities:

  (Additions) deletions to oil and gas properties           2,749       (7,874)

Cash flows from financing activities:

  Cash distributions to partners                         (413,500)    (367,165)
                                                         --------     --------

Net increase in cash and cash equivalents                  25,113       20,304
Cash and cash equivalents at beginning of period          170,141      117,053
                                                         --------     --------

Cash and cash equivalents at end of period              $ 195,254    $ 137,357
                                                         ========     ========


         The financial information included herein has been prepared by
           management without audit by independent public accountants.

   The accompanying notes are an integral part of these financial statements.

                                        6

<PAGE>



                           PARKER & PARSLEY 89-A, L.P.
                        (A Delaware Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                               September 30, 1996
                                   (Unaudited)

Note 1.

Parker  &  Parsley  89-A,  L.P.  (the  "Registrant")  is a  limited  partnership
organized in 1989 under the laws of the State of Delaware.

The Registrant  engages  primarily in oil and gas  development and production in
Texas and is not involved in any industry segment other than oil and gas.

Note 2.

In the opinion of management, the Registrant's unaudited financial statements as
of September 30, 1996 and for the three and nine months ended September 30, 1996
and  1995  include  all  adjustments  and  accruals  consisting  only of  normal
recurring accrual adjustments which are necessary for a fair presentation of the
results for the  interim  period.  These  interim  results  are not  necessarily
indicative of results for a full year.

Certain  information  and  footnote  disclosure  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed  or  omitted  in this Form 10-Q  pursuant  to the rules and
regulations of the Securities and Exchange Commission.  The financial statements
should  be read in  conjunction  with the  financial  statements  and the  notes
thereto  contained  in the  Registrant's  Report on Form 10-K for the year ended
December 31, 1995, as filed with the Securities and Exchange Commission,  a copy
of which is  available  upon  request by writing to Steven L. Beal,  Senior Vice
President, 303 West Wall, Suite 101, Midland, Texas 79701.

Item 2.          Management's Discussion and Analysis of Financial Condition
                   and Results of Operations (1)

Results of Operations

Nine months ended  September 30, 1996 compared with nine months ended  September
  30, 1995

Revenues:

The  Registrant's  oil and gas revenues  increased to $802,427 from $710,280 for
the nine months ended September 30, 1996 and 1995, respectively,  an increase of
13%. The increase in revenues  resulted from higher average prices  received per
barrel of oil and mcf of gas,  offset by a 9% decline in barrels of oil produced
and sold and a 14% decline in mcf of gas produced and sold.  For the nine months
ended September 30, 1996, 27,017 barrels of oil were sold compared to 29,619 for
the same period in 1995, a decrease of 2,602 barrels.  For the nine months ended
September  30, 1996,  102,999  mcf of gas were sold compared to  119,461 for the

                                        7

<PAGE>



same  period in 1995,  a decrease of 16,462 mcf.  The  decreases  in oil and gas
production were due to the decline  characteristics  of the Registrant's oil and
gas properties.  Management expects a certain amount of decline in production to
continue in the future until the Registrant's  economically recoverable reserves
are fully depleted.

The average  price  received per barrel of oil  increased  $3.57,  or 21%,  from
$17.24  for the nine  months  ended  September  30,  1995 to $20.81 for the same
period in 1996 while the average  price  received per mcf of gas  increased  40%
from $1.67 during the nine months ended September 30, 1995 to $2.33 in 1996. The
market price for oil and gas has been extremely volatile in the past decade, and
management expects a certain amount of volatility to continue in the foreseeable
future.  The  Registrant may therefore sell its future oil and gas production at
average  prices lower or higher than that received  during the nine months ended
September 30, 1996.

Costs and Expenses:

Total  costs and  expenses  decreased  to  $500,831  for the nine  months  ended
September  30,  1996 as compared  to  $665,807  for the same  period in 1995,  a
decrease of $164,976,  or 25%.  This  decrease was due to declines in production
costs and  depletion,  offset  by an  increase  in  general  and  administrative
expenses ("G&A").

Production  costs were $323,712 for the nine months ended September 30, 1996 and
$341,758 for the same period in 1995  resulting in an $18,046  decrease,  or 5%.
The decrease was the result of a decline in well repair and  maintenance  costs,
offset by an increase in workover expense.

G&A's  components are  independent  accounting and  engineering  fees,  computer
services,  postage and managing  general partner  personnel  costs.  During this
period, G&A increased, in aggregate,  20% from $21,308 for the nine months ended
September 30, 1995 to $25,467 for the same period in 1996.

Depletion was $151,652 for the nine months ended  September 30, 1996 compared to
$302,741 for the same period in 1995,  representing  a decrease of $151,089,  or
50%. This decrease was primarily  attributable to the following  factors:  (i) a
reduction  in the  Registrant's  net  depletable  basis  from  charges  taken in
accordance with Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of",  (ii) a reduction in oil  production  of 2,602  barrels for the nine months
ended  September  30, 1996 as compared to the same period in 1995,  and (iii) an
increase in oil and gas reserves during the third quarter of 1996 as a result of
higher commodity prices.

Three months ended September 30, 1996 compared with three months ended September
  30, 1995

Revenues:

The  Registrant's  oil and gas revenues  increased to $257,114 from $227,927 for
the three months ended September 30, 1996 and 1994, respectively, an increase of
13%. The increase in revenues  resulted from higher average prices  received per

                                        8

<PAGE>



barrel  of oil  and mcf of gas,  offset  by an 11%  decline  in  barrels  of oil
produced and sold and a  27%  decline  in mcf of gas produced and sold.  For the
three months ended  September 30, 1996,  8,657 barrels of oil were sold compared
to 9,715 for the same period in 1995, a decrease of 1,058 barrels. For the three
months ended September 30, 1996,  31,414 mcf of gas were sold compared to 42,763
for the same  period  in 1995,  a  decrease  of 11,349  mcf.  The  decreases  in
production were due to the decline  characteristics  of the Registrant's oil and
gas properties.

The average  price  received per barrel of oil  increased  $5.10,  or 31%,  from
$16.48 for the three  months  ended  September  30,  1995 to $21.58 for the same
period in 1996 while the average  price  received per mcf of gas  increased  41%
from $1.59 during the three months ended September 30, 1995 to $2.24 in 1996.

Costs and Expenses:

Total costs and  expenses  decreased  to  $148,423  for the three  months  ended
September  30,  1996 as compared  to  $219,345  for the same  period in 1995,  a
decrease of $70,922,  or 32%.  This  decrease was due to declines in  production
costs and depletion, offset by an increase in G&A.

Production  costs were $96,766 for the three months ended September 30, 1996 and
$106,360 for the same period in 1995, resulting in a $9,594 decrease, or 9%. The
decrease was primarily the result of a reduction in well repair and  maintenance
costs.

G&A's  components are  independent  accounting and  engineering  fees,  computer
services,  postage and managing  general partner  personnel  costs.  During this
period, G&A increased, in aggregate,  34% from $6,112 for the three months ended
September 30, 1995 to $8,199 for the same period in 1996.

Depletion was $43,458 for the three months ended  September 30, 1996 compared to
$106,873 for the same period in 1995.  This  represented a decrease in depletion
of $63,415,  or 59%,  primarily  attributable  to the following  factors:  (i) a
reduction  in the  Registrant's  net  depletable  basis  from  charges  taken in
accordance with FAS 121, (ii) a reduction in oil production of 1,058 barrels for
the three  months  ended  September  30,  1996 as compared to the same period in
1995,  and (iii) an increase in oil and gas  reserves  during the third  quarter
of 1996 as a result of higher commidity prices.

Liquidity and Capital Resources

Net Cash Provided by Operating Activities

Net cash  provided by operating  activities  increased  $40,521  during the nine
months ended  September 30, 1996 from the same period ended  September 30, 1995.
This  increase was primarily  attributable  to an increase in oil and gas sales,
offset by an increase in production costs paid.

Net Cash Provided by (Used in) Investing Activities

The Registrant's investing activities during the nine months ended September 30,
1996 and 1995, respectively,  were related to the disposal or replacement of oil
and gas equipment on active properties.
                                         9

<PAGE>



Net Cash Used in Financing Activities

Cash was  sufficient  for the nine  months  ended  September  30,  1996 to cover
distributions  to the partners of $413,500 of which $409,355 was  distributed to
the limited partners and $4,145 to the managing  general  partner.  For the same
period ended  September 30, 1995, cash was sufficient for  distributions  to the
partners of $367,165 of which $363,490 was  distributed to the limited  partners
and $3,675 to the managing general partner.

It is expected  that future net cash  provided by operating  activities  will be
sufficient for any capital expenditures and any distributions. As the production
from the properties declines, distributions are also expected to decrease.

- - ---------------

(1)    "Item 2. Management's  Discussion and Analysis of Financial Condition and
       Results of Operations"  contains forward looking  statements that involve
       risks and uncertainties. Accordingly, no assurances can be given that the
       actual  events and  results  will not be  materially  different  than the
       anticipated results described in the forward looking statements.


                           Part II. Other Information

None.



                                       10

<PAGE>


                           PARKER & PARSLEY 89-A, L.P.
                        (A Delaware Limited Partnership)



                               S I G N A T U R E S



       Pursuant to the requirements of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                     PARKER & PARSLEY 89-A, L.P.

                              By:    Parker & Parsley Development L.P.,
                                      Managing General Partner

                                     By:   Parker & Parsley Petroleum USA, Inc.
                                            ("PPUSA"), General Partner




Dated:  November 11, 1996     By:    /s/ Steven L. Beal
                                     ----------------------------------------
                                     Steven L. Beal, Senior Vice President
                                       and Chief Financial Officer of PPUSA



                                       11

<PAGE>




<TABLE> <S> <C>

<ARTICLE> 5
<CIK> 0000844582
<NAME> 89A.TXT
       
<S>                             <C>
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1996
<PERIOD-END>                               SEP-30-1996
<CASH>                                         195,254
<SECURITIES>                                         0
<RECEIVABLES>                                  104,390
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               299,644
<PP&E>                                       6,709,531
<DEPRECIATION>                               4,108,819
<TOTAL-ASSETS>                               2,900,356
<CURRENT-LIABILITIES>                           46,385
<BONDS>                                              0
                                0
                                          0
<COMMON>                                             0
<OTHER-SE>                                   2,853,971
<TOTAL-LIABILITY-AND-EQUITY>                 2,900,356
<SALES>                                        802,427
<TOTAL-REVENUES>                               809,193
<CGS>                                                0
<TOTAL-COSTS>                                  500,831
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                                308,362
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                            308,362
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                   308,362
<EPS-PRIMARY>                                    36.71
<EPS-DILUTED>                                        0
        

</TABLE>


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